How Should Married Couples Fill Out a W4?

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If your ducks are now in a row and and you've married, a next step may be to complete a 2020 version of the W-4 form. The Internal Revenue Service (IRS) issued a new W-4 to reflect the changes made to the way your employer determines how much tax to withhold from your paycheck​.

Allowances are no longer used to guide the calculation of the tax withholding according to your income, deductions and marital status. Instead, your employer now relies on information you document in the new W--4 regarding your expected filing status, income(s) from other jobs, number of dependents and the deductions you will claim when filing your taxes. In regards to filing status in particular, a married couple must elect one of two choices: filing jointly or separately.

Determining Your Filing Status

To select a filing status, first determine the eligibility criteria for each one. If you're married and your spouse is living, you have two options:

  • Married Filing Jointly (MFJ)​: When you file jointly, you file a single return that reports the income and deductions for both you and your spouse.
  • Married Filing Separately (MFS)​: If you file separately, each spouse files a return, reporting income and deductions individually.

If you're married by ​Dec. 31​ of the tax year for which you file the return, you can file jointly, whether you were married one month of the year or 12.

Completing the W-4 Form

When you complete the W-4, the initial step is electing a filing status. If your spouse doesn't work, for instance, it's likely you'll file married filing jointly. A review of the new W-4 instructions should ensure that you choose the right one.

  • Your filing status influences your tax rates and standard deduction, each of which impacts the amount of your income that’s not subject to federal income tax. The greater the number of dependents you have and deductions you claim​,​ the less the amount of cash that's taken out of your paycheck. Ideally, your annual withholding and your tax liability should be approximately the same.
  • If you have more than one job, or if you and your working spouse will file a joint return, the W-4 form requires you to perform one of two steps: Use the IRS estimator to estimate your withholding or, if you have two or more jobs, complete a W-4 for each job and estimate the withholding for each.
  • Next, if you're filing a joint return and your income is $400,000 or less, or $200,000 or less if you file a single return, you must document your dependents and calculate your deductions. Your entries will depend on the number of children in the family and whether you have other dependents.
  • The final step to complete the W-4 is to document adjustments, such as other earned income, additional deductions and the amount of additional tax you want your employer to withhold from your paycheck.

As you'll see when you complete the new W-4, the form requires calculations and elections based your personal situation. So, it's a good idea to review your latest tax returns before you begin. Also, it may be wise to consult an accountant or visit IRS.gov and search for the Tax Withholding Estimator to make sure you have the right amount of tax withheld from your paycheck

Married Filing Jointly

In 2020, a married couple has the choice of a “married filing jointly” (MFJ) or “married filing separately” (MFS) status. If you elect the MFJ option, the following facts prevail:

Tax Rate MFJ​: As a married couple that files jointly, you're taxed 10 percent of your combined income, up to $19,750, ​12 percent of your income between $19,750 to $80,250 and so on to a maximum of ​37 percent​ of income over $622,050.

Standard Deduction MFJ:​ The standard deduction for an MFJ tax filing is ​$24,400​ versus that of an MFS standard deduction of ​$12,200​.

Tax Credits MFJ​: Tax credits available to couples who file a joint return include:

  • Earned Income Tax Credit​: The EITC benefits working spouses who earn a low to moderate income.
  • American Opportunity Tax Credit:​ The AOTC reduces your taxes if you are paying tuition costs for a spouse or child.
  • Lifetime Learning Tax Credit​: The LLTC reduces the amount of taxes owed by those who are earning an undergraduate, graduate or professional degree.
  • Adoption Credit​: A tax credit for qualified adoption expenses or exclusion from income for employer-provided adoption assistance.
  • Child and Dependent Care Tax Credit​: A tax credit related to the expenses of caring for a qualifying individual so you and your spouse can work or actively look for work.
  • Premium Tax Credit:A tax credit that helps families pay health insurance premiums.

When to File Together

If the income of one spouse is much greater than that of the other (you earn $85,000 and your spouse earns $35,000), it's likely that filing a joint return will place the higher wage earner in a lower tax bracket. On the other hand, if both incomes are relatively high, combining them might mean you pay more tax.

Married Filing Separately

As a married couple, if you elect the "married filing separately" option:

Tax Rate MFS:​ As a married couple that files separately, you're taxed 10 percent​ of your income up to $9,875, ​12 percentof your income between $9,875 to $40,125 and so on to a maximum of ​37 percent​on income over $311,025.

Standard Deduction MFS:​ The standard deduction for a MFJ tax filing is ​$24,400​ versus that of an MFS standard deduction of ​$12,200​.

Tax Credits:

  • Earned Income Tax Credit​: Not available to taxpayers with MSF status.
  • American Opportunity Tax Credit​: Not available to taxpayers with MSF status.
  • Lifetime Learning Tax Credit​: Not available to taxpayers with MSF status.
  • Adoption Credit​: Not available to taxpayers with MSF status.
  • Child and Dependent Care Tax Credit​: Not available to taxpayers with MSF status.
  • Premium Tax Credit​: Not available to taxpayers with MSF status except under certain criteria.

When to File Separately

Filing separately as a married couple has some limitations. If you itemize deductions, your spouse can't claim the standard deduction. This means that you must both itemize or use the standard deduction. Also, as the above section indicates, you would be ineligible for education tax credits, student tax deductions, the earned income credit and other tax credits.

In addition, if you file separately, neither you nor your spouse will be eligible for the premium tax credit, which helps low or moderate income people buy health insurance through the exchanges established in the Affordable Care Act.

Occasions when couples should consider filing separately include when one spouse has fallen behind in student loan payments, owes back taxes or child support. Because joint filers are liable for each other's debts, both spouses could have their wages garnished regardless of who actually owes the money.

Revising your W-4 Form

If your marital status has recently changed, a next step might be to revise your W-4 form. This form guides an employer's calculation of the amount of income tax to withhold from your paycheck. Before you complete the form, consult an accountant or IRS literature to understand the ramifications of the choice you make.